electroCore, Inc. Q4 FY2025 Earnings Call

Greetings, and welcome to the electroCore Fourth Quarter and Full Year 2025 Earnings Conference Call. Reminder, this call is being recorded. Earlier today, electroCore published results for the fourth quarter and full year ended December 31, 2025. A copy of the press release is available on the company's website. I'd like to remind you that members on the call will make statements during the call that include forward-looking statements within the meaning of the federal securities law, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements contained in this call that are not statements of historical fact should be deemed to be forward looking. All forward-looking statements, including, without limitation, any guidance, outlook or future financial expectations, our operational activity and performance, including any statements regarding first quarter 2026 and full year performance and the path to profitability are based upon the company's current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these statements. For a list of these risks and uncertainties associated with the company's business, please see the company's filings with the Securities and Exchange Commission. ElectroCore disclaims any intention or obligation, except as required by law, to update or revise any financial projections, forward-looking statements whether because of new information, future events or otherwise. This conference call contains time-sensitive information that is accurate only as of the live broadcast today, March 19, 2026. It's now my pleasure to introduce Dan Goldberger, electroCore's Chief Executive Officer.

Thank you for participating in today's electroCore earnings call. Joining me today are Dr. Thomas Errico, one of our founders, investor, and Chairman of the electroCore Board of Directors, and Joshua Lev, our Chief Financial Officer. Before we begin, I want to express how privileged I feel to address so many colleagues, partners, investors, and their friends who have supported electroCore since I took the CEO position in late 2019. Over the years, we've taken significant steps in building a great company. I'm immensely proud of our accomplishments and truly thankful for your support, as well as the support and hard work of all the employees who have worked tirelessly to make our noninvasive pain therapeutics available to patients in need. With that in mind, I would like to share an important personal decision regarding the next chapter for myself and this organization. After thoughtful discussions with the Board about the company's next phase of growth, I have decided to retire as CEO of electroCore effective April 1, 2026. When I joined in late 2019, my focus was on strengthening the company's financial position and establishing a focused commercial strategy. Over the past several years, we've made substantial progress on those objectives, including building momentum in the VA channel, expanding our product portfolio, and positioning the company on a stronger financial footing. With that foundation now established, the Board and I believe this is the right time to initiate a leadership transition as electroCore moves into its next stage of growth. To ensure a seamless transition, the Board of Directors has appointed Joshua Lev as Interim President, and electroCore is also hiring a new Chief Operating Officer. These steps will provide stability and operational momentum while the Board conducts a thorough search for my permanent successor. I look forward to continuing to support the company during this transition and to exploring new opportunities where my experience may be beneficial. I step away knowing that electroCore is in excellent hands and well positioned for continued success. I am confident the leadership team will continue to build on the progress we've made and drive the company forward in this new phase of growth. It has been an honor to lead this organization and serve you, our shareholders. Thank you for your unwavering support. I look forward to watching electroCore thrive. Now, the Chairman, Dr. Errico, would like to share a few thoughts on strategy.

Thank you, Dan. On behalf of the Board of Directors, I want to take a moment to recognize Dan Goldberger for his outstanding leadership. We're grateful for the strong foundation he has built and for the momentum the company carries forward today. As we look ahead, I'm pleased to share an update on our leadership transition, which is designed to ensure continuity and focus as we enter our next phase of growth. Effective April 1, Joshua Lev, our Chief Financial Officer, will assume the role of Interim President, overseeing day-to-day operations while continuing to serve as CFO. Josh has more than 15 years of experience in finance and operations and has played a central role in guiding the company through several key milestones. He is well positioned to lead during this transition as we conduct a search for a permanent successor. In April, we will welcome Michael Fox as our new Chief Operating Officer. Michael joins us from Pro Medtech, where he served as Chief Revenue Officer. He brings more than three decades of experience across pharmaceuticals, biotechnology, and medical devices with deep expertise in complex federal markets, including the VA system. His operational leadership will be instrumental as we continue to scale across the organization. With this transition in place, the Board and management team remains fully focused on executing our strategy of increasing sales within covered entities such as the VA system and driving long-term value through market expansion into general wellness with our Truvaga product offering. On to the business. We remain encouraged by the continued momentum of our noninvasive vagal nerve stimulation platform. Before Josh Lev reviews the financials, I'd like to briefly highlight the clinical foundation supporting our portfolio. Our flagship gammaCore device is supported by a substantial body of scientific evidence, including more than 20 peer-reviewed publications and multiple randomized controlled trials. These studies have demonstrated statistically significant reductions in migraine and cluster headache frequency, intensity, and duration. gammaCore is FDA cleared for both acute and preventive treatments in adults and adolescents, and real-world adoption continues to build. For example, U.K. audit data shows that a meaningful portion of cluster headache patients achieved clinically significant response rates alongside measurable cost savings compared to standard care. Beyond gammaCore, exploratory studies plus additional indications, including Shorn syndrome, gastroparesis, traumatic brain injury, and inflammatory conditions related to COVID-19 highlighted the potential for broader anti-inflammatory potential of nVNS. These studies have shown encouraging signals across fatigue, quality of life measures, and anti-inflammatory biomarkers. At the same time, ongoing trials in areas such as PTSD, long COVID, substance abuse disorder, muscular skeletal pain, and concussions, supported by partnerships, including the NFL and NFLPA funded research, support our long-term strategy for indication expansion. In addition, our Quell device is supported by a growing body of peer-reviewed research, including randomized controlled trials published in well-regarded journals. These studies demonstrate efficacy across multiple pain-related conditions, including difficult-to-treat fibromyalgia, further strengthening the clinical foundation of our portfolio. On the consumer side, Truvaga continues to gain traction as a wellness product focused on stress reduction, sleep quality, and emotional well-being through parasympathetic nervous system activation. Truvaga has recently received recognition from major lifestyle publications, and engagement across social and digital channels continues to grow. For example, national media outlets have been driving website traffic. Miranda Kerr mentioned Truvaga on a popular podcast, and influencers have been promoting it; Truvaga is now available through online retail outlets like Best Buy and Rehab. Independent in-home studies indicate high levels of user-reported calmness and sleep improvement after consistent use. Importantly, this momentum supports diversification of our revenue mix and highlights the scalability of our nVNS technology in direct-to-consumer channels. First, the expanding clinical validation across our product lines continues to support prescription growth, payer engagement, and international expansion. We believe this positions the company well for sustained revenue acceleration and long-term value creation as we bolster our commercial team with VA governmental specialists to further execute against our pipeline and strategic priorities while maintaining our attention on operating efficiency to progress towards profitability over time. And now I will turn the call over to our Interim President and CFO, Joshua Lev, to walk through the financial results.

Dr. Errico. Before discussing the financial results, I want to take a moment to recognize the leadership transition we announced earlier. The individual who has left played a significant role in shaping the company in recent years, and the strategy we are following today is a reflection of that work. Our focus is on executing our strategy, increasing adoption within the VA system, and scaling our wellness platform. Now, let me provide details about our fourth quarter and full year 2025 performance. electroCore achieved another year of robust revenue growth, extending our trend and surpassing revenue and EPS estimates from analysts. The VA hospital system remains our largest client and continues to expand. We anticipate further adoption of our noninvasive therapies. Truvaga sales have shown impressive strength, driven mainly by our e-commerce store and a growing network of affiliates promoting Truvaga. Revenue for the fourth quarter of 2025 reached an all-time high of $9.2 million, representing a 31% increase year-over-year, which brings our full year 2025 revenue to $32 million, a 27% rise compared to 2024. The revenue from our products increased by 23% year-over-year to $26 million, thanks to the ongoing growth of gammaCore and Quell within the VA system. Our acquisition of Quell assets in May 2025 generated $1.5 million in revenue. By December 31, 2025, our products were present in over 200 facilities, up from 170 a year ago. Approximately 13,400 VA patients have utilized the gammaCore device; we estimate this accounts for roughly 2% penetration of the addressable VA headache market. Given the scale of the VA system and the number of patients suffering from headaches related to PTSD and mild traumatic brain injury, we see a significant opportunity for continued growth. To capitalize on this opportunity, we expanded our VA sales presence in 2025 by adding both internal team members and contracted representatives. In 2026, we will also welcome Michael Fox as Chief Operating Officer, bringing experience in commercializing products within federal healthcare systems to help accelerate our growth and broaden our commercial reach. Turning to our general wellness channel, fourth quarter revenue reached $1.4 million, marking a 31% year-over-year increase. Full year general wellness revenue totaled $5.5 million, a 97% increase compared to 2024, driven primarily by $5.4 million in Truvaga sales, which rose 93% from 2024. Although Truvaga revenue was flat sequentially, the quarter included a one-time $500,000 order linked to a third-party clinical trial. Excluding that, Truvaga revenue grew approximately 40% sequentially. Our return on advertising spend for the quarter was around $2.10, indicating that for every dollar spent on media, we generated nearly $2.10 in return. This compares to $1.80 in Q3 2025, mainly due to a seasonal increase in holiday sales. Across our e-commerce platforms, conversion rates have increased slightly but remain around 12% to 15% compared to prior periods. We believe the improvement in ROAS is due to our shift away from Amazon and our team's enhanced efforts in selling through other direct-to-consumer platforms. As we look into 2026, we plan to expand applications for our NDNS platform and introduce additional wellness offerings, including Quell relief for lower extremity pain. We are also working on a next-generation mobile application designed to provide a more personalized and data-driven user experience, which could offer recurring revenue opportunities. Given the prospects ahead, we are investing in personnel, marketing, and product development to drive growth in 2026 to 2027 while maintaining disciplined operating practices. Briefly reviewing the full year 2025 financial results, net sales increased 27% to $32 million, driven by growth in prescription gammaCore and Quell biologic products in the VA system, as well as higher sales of our non-prescription general wellness products. We expect that the majority of our revenues in 2026 will continue to come from the U.S. Department of Veterans Affairs. Net profit rose to $27.8 million for the year ended December 31, 2025, with a margin of 87% compared to 5% in the previous year. Research and development expenses of $2.7 million declined by approximately $375,000 from the previous year, primarily due to development work on gammaCore Emerald and next-generation projects. Selling, general and administrative expenses totaled $38.2 million for the year ended December 31, 2025, reflecting an increase of $7 million compared to the prior year's $31.2 million. Marketing expenses rose by $4.3 million compared to the previous period. The growth in sales and marketing was largely driven by a $3.8 million increase in burial expenses, contributing to the sales increase. General and administrative expenses also grew by $2.7 million from the prior year, primarily due to an $800,000 rise in legal fees related to early development activities, with additional costs tied to one customer, investments in systems, and transaction fees. Total operating expenses for 2025 were approximately $40.9 million compared to $33.6 million in 2024. Other expenses of $800,000 for the year ended December 31, 2025, rose by $1 million from the previous period, primarily due to nonrecurring expenses. Our net loss for 2025 was $14 million, or $1.65 per share, compared to a net loss of $11.9 million, or $1.59 per share, in 2024. This loss is mainly due to increased operating expenses and other related costs. Adjusted EBITDA net loss for 2025 was $8.7 million compared to $9 million the year before and primarily reflects a GAAP net loss offset by adjustments related to the Neurometrix acquisition, bad debt reserves, and litigation expenses. A reconciliation of GAAP net loss to non-GAAP adjusted EBITDA has been provided in the financial statement table. As of December 31, 2025, we had approximately $11.6 million in cash and marketable securities, down from approximately $12.2 million as of September 30, 2024. Looking forward, we are focused on accelerating growth in our high-margin sectors, especially within the VA, by adding leaders like Michael Fox, who has extensive experience in commercializing products in federal channels, while also enhancing our general wellness channel. We believe our revenue for 2026 has the potential to continue growing at around 30%. However, due to the leadership transition, we are not providing detailed guidance at this time and will revisit formal guidance when appropriate. We believe the company is well positioned to drive growth and adoption in the wellness sector while maintaining discipline on operating efficiency to enhance long-term shareholder value and profits. Now, I would like to turn the call over to the operator for Q&A.

Congrats on all the accomplishments, and we wish you well. I guess, firstly, could you talk about the channels? Talk about the VA and talk about DTC for both gammaCore as well as Quell where you anticipate in '26. I know that you've done a great job in adding centers of excellence PAs. How might the outlook into 2026 and steps and thoughts about the DTC business for both Truvaga and Quell.

Jeff, thanks so much. I appreciate you joining the call and always appreciate your great questions. From the VA channel, we've had a lot of acceleration over the course of the last year in 2025. And we've been pretty adamant that we believe the way for us to grow that is to increase the number of boots on the ground, either through W-2 employees or through a 1099 network. We've done a really nice job over the course of 2025 of increasing those 1099s, which is a variable expense as it relates to the overall sales and marketing; it doesn't add any headcount. But we're really enthusiastic that we have a new commercial leader joining in Michael Fox, who's joining mid-April. Michael comes to us with a background in selling primarily into the federal channels. He has years of experience and actually decades of experience in building out commercial-related teams, primarily focused on accelerating growth within those federal channels, particularly in the VA. So as we think about how we foresee the VA growing over the course of 2026, while we haven't given any specific guidance to that, our thought is that we have an existing team, which has been proven successful to grow within those channels. And then we've got Michael who's going to come in and bring his know-how, his knowledge, and hopefully, some of his relationships to help accelerate growth within the VA. When it comes to the direct-to-consumer channel, I think what we realized earlier on this year is we're much more effective in terms of our efficiency of media spend when we're focused primarily on driving traffic to our own website at www.truvaga.com. And the way that we've been able to grow that most efficiently is by increasing the number of affiliates and influencers that we have that are out there that are talking about electroCore and our Truvaga product. So as we look into 2026, our goal is to focus on identifying more partnerships such as the Miranda Kerr relationship that we talked about earlier. We have Mark, Best Buy, and things of that nature that will help us with the growth in the channel that will help grow around the truvaga.com traffic.

Okay. That's perfect. And then one more as a follow-up. Could you talk about OUS channels and any expectation into '26 of US or any specific geographies worth calling out today?

Yes. From our perspective, NHS England remains an important channel to mention, as it relates to our overall revenue. We have significant adoption within the NHS in England. However, there is a bottleneck due to the regulations regarding who must write prescriptions for them to be processed and fulfilled through the program. We are interested in expanding to other countries outside of England and have distributors in places like Belgium where we have some reimbursement. We are in the process of developing the adjudication infrastructure necessary to ensure patients can access coverage or pay through cash providers, working through third-party distributors. Currently, NHS England will be our primary focus as the main driver of our international revenue. As we establish additional distribution partnerships and reimbursement opportunities arise, we will keep stakeholders informed.

This is Charles on for RK. And Dan, congrats on all you've done for electroCore, and it was great working with you.

Thank you.

So for my first question, with the changes with management, the new hiring of Michael Fox and increased responsibilities for Joshua. I wanted to better understand these new leadership dynamics. And so will Michael focus primarily on kind of the VA business? Will Joshua handle the wellness in ex-VA?

Yes, the answer to your question is yes. Michael brings a strong background in building commercial organizations. We expect him to take some time to familiarize himself with our current sales operations. His experience, particularly in commercial sectors including not just the VA but also other federal systems and commercial insurers like Kaiser, will be relevant to his role. As for day-to-day activities related to Truvaga, that will currently be under my responsibility.

Perfect. And then can you remind us of the prior VA contracts? And with the onboarding of Michael, is there going to be any adjustment to this contract?

Great question. At the moment, the answer is I don't know, but I don't think so. Our VA contract already has our products listed on it. The name and who's at the helm of an organization doesn't really necessarily change the nature of the contract in its own right. That said, Michael is coming to us with years and decades of experience in selling to these different channels. So if there are opportunities for us to make that contract more efficient for both electroCore or for the VA for that matter for the customer, then what's absolutely on the table that we would consider it.

And then for my final question. So Dan has kind of been the architect on kind of TAC-STIM in the military channel. So with him leaving, does that mean that there might be a deemphasis on the TAC-STIM product?

No, I don't think so. TAC-STIM has always been a variable business for the company, and we still have a strong pipeline of various military groups and organizations that are of interest. If anything, I believe there may be an opportunity to advance some of those prospects. As mentioned earlier, Michael Fox's experience extends beyond the VA to all federal systems. So, while it doesn’t guarantee that it will happen, there could be a chance to expedite some of those revenue opportunities, especially since we have someone with extensive experience working with congressional representatives and different military organizations.

Our next question comes from Charles Wallace. Okay. Let's go to Jeremy Pearlman. Jeremy, do you want to unmute?

First, you mentioned earlier on the call the Quell relief. Will that be sold into the VA DoD channels? Will it also be in general wellness? Is that expected in the first half or second half of '26? Will revenue from that be included in the guidance, or do you think any revenue generated would just be additional?

Jeremy, thanks so much for the question. So our Quell Relief product, which is also internally known as Quell over-the-counter, is technically an over-the-counter product. So it's not technically a general wellness product. Our plan is to launch that product in the first half of 2026. Our expectations for that product are similar to how we originally launched Truvaga. I'm not sure if you recall, but we did a very soft launch early on just to see what kind of access and traction we got. The Quell brand itself has legacy users and legacy demand, and we're hoping that by doing a soft launch of the program, we could start getting a sense as to where to best spend our media dollars. Which will then give us a more robust plan as to how we go ahead and grow that into its own product category. But to answer your question, right now, when we look at our 30% guidance that we've given year-over-year, anything that would come out of the Quell OTC or the Quell relief product would be incremental to that.

Okay. Understood. Great. Now, let's talk about your return on advertising spend. You mentioned it was $2.1 million this quarter. In response to earlier questions, you indicated that you're looking for more partnerships to support growth. Is there a target for 2026? How much can you realistically increase that return? Is it possible to reach the 3x range or just see incremental gains?

That's a great question. The answer really varies. We have a dedicated team that monitors our return on advertising spend daily, adjusting our media spending based on where we're seeing the best efficiency or return on investment. In the industry, we expect the return to be around 2 to 2.5. There have been times during Truvaga's history when we achieved returns over 3%. However, as we become more efficient in a specific channel, that efficiency tends to peak and then decline, so we need to explore new options. To answer your question, our goal for the year is to maintain a return above 2, targeting around $2 of revenue for each dollar spent on media as a conservative estimate. We aim to average between 2 and 2.5 throughout the year.

Okay. Understood. And then just last question. In the past, could you share any updates on your insurance reimbursement coverage? What do you think are the biggest barriers to broader reimbursement adoption that you are facing? It always seems like it's been a struggle over time.

Yes. Thank you. So just from an update point of view, I think the biggest opportunity we have in front of us is the work that we've been doing with Kaiser. We've spent some time talking about it in the past. Earlier on in this year, we finally got on contract with Kaiser. So not only are we on formulary, but we're also on contract. That allows us to give us a license to sell, if you will, within the organization and gives prescribers an easier opportunity to actually prescribe the product itself, but it's not necessarily the end all be all. We spent a better part of the last quarter. And within 2026, what we plan to do is spend more time trying to develop the right KOLs and subject matter experts advocates for the product within the system. I think Kaiser will remain to be our largest sort of opportunity as it relates to from an insurance point of view, where can we get coverage. And the reason why I say that is Kaiser is the largest of these managed care systems. Typically, they're kind of like a beachhead strategy. If you can get Kaiser and show other managed care systems that it works, other managed care systems will follow suit. So right now, we've guided in the past that we've got dedicated resources focused primarily on trying to get Kaiser up and running. If we do, our plan would be to leverage that success and turn it into additional adoption throughout other managed care insurers.

Okay. And you think that, that could be a 2026 event?

No, I would think that Kaiser, some Kaiser success the plan is or the hope is for it to be in 2026. I think other additional insurers would be after that. It would be 2027 and 2028.

And Josh, I'm going to turn the call back over to you for a closing statement that has exhausted our questions from live callers.

Well, great, Rob. Thank you so much. Just wanted to thank everyone for the opportunity and for joining us today. I want to recognize the team for their continued hard work and their commitment to our patients, to the health care providers, and to our customers, especially as we go through this transition. I also want to thank our shareholders for their continued support. Before we conclude, I'd like to extend our sincerest appreciation to Dan for all of his leadership and the foundation that he's leaving behind. We're excited about the opportunities ahead and remain focused on execution, disciplined investment, and long-term value creation for our shareholders. On behalf of myself, the employees of electroCore and everyone who has benefited from your leadership, Dan, thank you for your dedication, your vision, and the lasting impact you've made on the organization. We wish you the very best in your retirement and in the next chapter ahead.

That concludes today's call. Thank you for your participation.